The oil rig count was unchanged last week after eight weeks of consecutive rises, but traders and analysts expect it to continue rising with the recovery in crude prices.
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The US dollar declined 0.5% Friday morning after government data showed a smaller than expected rise in August nonfarm payrolls, signaling to investors that the Federal Reserve will not raise interest rates this month.
The dollar index weakened after the jobs report, making oil and other greenback-denominated commodities more affordable for holders of the euro and other currencies.
Front-month October Brent settled at US$48.37 a barrel on August 30, up from $42.14 on August 1, and NYMEX WTI settled at $46.35 on August 30, up from $40.84 on August 1. “So if the rig count stays steady, we could finish the year at about $50”, said Jay Hatfield of New York-based InfraCap MLP, an exchange-traded fund that invests in USA energy projects. Brent was down 6 percent on the week, on track for its biggest weekly loss since late July. WTI was on course to lose slightly more than 7 percent, its most since early July.
The thing to keep in mind is that though there has been talk about a meeting on the sidelines of the International Energy Forum (IEF) meeting in Algiers from September 26-28, there is no freeze deal on the table. These comments raised the expectations for output freeze talks and supported oil prices.
Investors are also skeptical that Organization of the Petroleum Exporting Countries (OPEC) and other producers such as Russian Federation will agree to cut production at a meeting in Algeria later this month despite Saudi Arabia’s efforts to boost prices.
Russian President Vladimir Putin has meanwhile urged compromise to find agreement on an oil production freeze to combat a global supply glut.
It is more likely, he said, that participants will continue to monitor the market and possibly postpone freeze talks to the official OPEC meeting in Vienna on November 30.
Many analysts remain skeptical that it will be successful. Refined-products stocks remain high; Opec supply is at record-high levels; non-Opec supply has picked up; and against this backdrop, oil-demand growth at best remains stable.
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NEW YORK – Oil prices rose more than 2% on Friday as a report showing weaker U.S. jobs growth in August suppressed the dollar, pushing up commodities, but crude futures remained on track for a big weekly loss on glut concerns.
